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NY Special Agent in Charge details work of IRS Criminal Investigation

Tom Fattorusso, Special Agent in Charge of the New York Field Office for IRS Criminal Investigation, spoke with WAMC in Albany June 15, 2023
Jim Levulis
Tom Fattorusso, Special Agent in Charge of the New York Field Office for IRS Criminal Investigation, spoke with WAMC in Albany June 15, 2023

An organization responsible for identifying $5.7 billion worth of tax fraud in 2022 is one of the lesser-known federal law enforcement agencies. The Internal Revenue Service’s Criminal Investigation division has more than 2,000 special agents and roughly 1,000 professional staff, making it the sixth-largest federal law enforcement agency in the U.S. It’s the only one authorized to investigate federal criminal tax violations. The New York Field Office – responsible for the entire state – is led by Special Agent in Charge Tom Fattorusso. The Capital Region native stopped by WAMC studios to detail his agency’s work and his path to the job in an interview with WAMC's Jim Levulis.

Fattorusso: It was a long journey to get here. I've been in the role for two years now. The first year I was in an acting capacity. It took about a year to get certified into the SES or the executive division. It's a federal process, you know, where you have to go through to get certified and there's interviews and so on and so forth, and writing and there's a whole process procedure to become an executive in the federal government. Once I cleared those hurdles, I became an executive around March of 2022. So I've been in the, the official SAC of New York since 2022, in March.

Levulis: What's your professional background that led you to this point in your career?

I have a varied background. I'm a local product. Although I was born downstate. I spent majority of my life in upstate New York, in Wynantskill. I went to LaSalle Institute for high school. I went to Hudson Valley [Community College.] I received an associate's degree in criminal justice from Hudson Valley. And I went to the College of Saint Rose to get my bachelor's degree in accounting. So I have an accounting background. I worked at Verizon for several years right out of Hudson Valley. And when I received my bachelor's degree, I decided I wanted a master's degree also. So I went to the University of Notre Dame, received a master's degree in accounting. From there, I worked at KPMG in Albany for about four years. And I was fortunate enough to get a position as a special agent with IRS Criminal Investigation in 2004 in Albany. So I've worked in Albany for many years as an agent, I became a supervisor in Albany, then I became an Assistant Special Agent in Charge for the entire field office, again, sitting in Albany. At that time, it was time to move on. I moved to Washington D.C., took over a program in Washington, D.C. It was an undercover program. So I ran the undercover program for the agency for about two years. I became the Special Agent in Charge of the Philadelphia Field Office after that in 2020. And in 2021, as I said, I was fortunate enough to become the acting SAC in New York.

Turning to the IRS CI, Criminal Investigation Unit. I'm sure this is a kind of an open-ended question in the sense, but what are the main functions of the IRS CI?

CI’s main function is to investigate criminal allegations of tax fraud. But we also investigate numerous other financial crimes. So what I tell people to make it the easiest, if it has to do with money, we follow the money and we investigate the crime.

You mentioned a little bit of your background that you have accounting experience, you have private sector experience. Is that typical for your coworkers in the IRS CI to have that financial background in addition to the law enforcement part that's necessary?

Yes. We all have some financial background, whether it's an accounting degree, which the vast majority of us have a degree in accounting, or work experience in the financial investigation realm. Some we take right out of college, so they graduate and we pick them up as a special agent. We send them to the training academy for 27 weeks at FLETC (Federal Law Enforcement Training Centers) in Glynco, Georgia. And then they come back and they have an on the job instructor that works them through getting them trained in the street and on the field. Then they become a full-fledged Special Agent. Some people work like myself, I worked for a number of years before I became a special agent. And I had the background, the experience and the education to go with it. So it varies from person to person, but we all get the same training when we go to the academy and we come out and we get the same field training and I t's been successful so far.

I understand the IRS CI works a lot with other federal law enforcement agencies. H ow exactly might those partnerships work out when it comes to say the DEA or ATF?

Those partnerships are valuable, because not every agency has the resources they need to do their job. So if you look at IRS CI, we follow the money. We're the best financial investigators on the planet hands down, there's nobody better. The DEA, their specialty, obviously, is narcotics. When you partner us together, it works because now you have an agency that their specialty is investigating narcotic trafficking. And then you have an agency that's investigating where the money goes and where it comes from. So our specialty in the narcotics world is following money laundering and following where the money goes. We look at it as a business. So you have the cartels that are making narcotics, they're shipping it to United States, they're selling it in the streets, and then all of a sudden, they have cash, because you know, not taking credit cards or checks for narcotic sales. So there's a load of cash that they need to get rid of it, it's not easy to get rid of cash. So it's our job to find out where the cash is, and where it's going, how people are getting paid and how they're transporting that because like I said, it's hard to transport, loads of cash. So that's where our expertise comes in. Same thing with ATF. So ATF is their specialty, as their name implies, is Alcohol, Tobacco, Firearms and Explosives. Again, we follow the money. So we partner. They're great at locating whether it's illegal weapons, firearms, explosives, or whatever the case may be. And then we try to track the organizations. So our job is, it doesn't stop when an arrest is made. So for example, if there's a narcotics arrest, that doesn't mean the case is over, we're trying to find out who's supporting the organization, how the organization is structured, because there's somebody sitting at the top. And our job is to find that person sitting at the top and take that person down. Because if you cut the head off the snake, then the whole body dies. So if you cut the head off the organization, then the hope is that organization dies. If somebody else steps up to take over that organization, then we try to locate that person and take them down to.

Looking through the notes on the IRS CI, noted that has an undercover unit. And I was wondering how that might look different than what most people might think of when they think of a law enforcement undercover unit in that the sense that you mentioned, you're looking at the cash, at the finances. That seems to me very, very ingrained undercover. Can you detail what that undercover unit might entail?

I can, without giving up too much of our secret, I'd be happy to talk about it because I ran the program for two years out of headquarters. So I'm very familiar with it. I was an undercover agent myself. So I worked in an undercover capacity for a few years as an agent. And it's a very interesting job. That's probably one of the jobs in federal law enforcement that's similar to what you may see on TV or in the movies, right? It's not exact, right? There has to be a story to tell. And it has to be interesting. But it's probably one of the closest things there is to what you see. So as far as IRS Criminal Investigation undercover agents go, our specialty, again, is finance and money. So that's what we pose as. We pose as financers. We pose as money people. We pose as those who can take your cash and help you make it look legitimate, to wash it. And hence, money laundering. So we help people to clean their cash. That helps us find out where the money is coming from, where it's going to, and then we can lay out the organization. And then when it's time to go to the U.S. Attorney's Office and the Department of Justice to receive indictments, we have a case put together it's a solid case. We get indictments and make arrests.

You mentioned a lot of this activity that your agency is involved in looking into and investigating involves cash. But our world has been shifting to more finance that is based in the digital world, connected to the internet, and then the addition of crypto currency. I wonder if those developments have made it harder or easier when it comes to your investigations in terms of is there more of a record to follow? Thinking back, you know, decades, if you didn't have the cash or maybe the paper records, maybe you were out of luck? But now the digital traces that might exist, how has that impacted the work that your agency does?

Digital currency has been interesting, but the way we look at it in IRS Criminal Investigation, it's another way to move money. And since we're already experts in financial investigations and the movement of money, it it's a learning curve for us. But it hasn't been as big of a learning curve as you may think. Because all it is, is following the money. And as you mentioned, you know, there's the blockchain right, you can see where transactions occur, although they could be complicated. And people could split up, for example, a Bitcoin. They can break it up in several different ways and send it to different wallets, and send it to different places. But we can track that we have people that are experts in that field. So it's just a different means for us to follow the money. It's nothing different than when we were following cash in our early days. We’re 100-year-old agency. We started in 1919. We started tracking money then, whether we were tracking cash, and maybe we were tracking checks, or wire transfers at some point. Now it's cryptocurrency. It's just another method for people to move money. We learn how to do it, we become experts in it. And I wouldn't say it's easier or harder, it's just different.

So this type of thing is incorporated in the updated training, ongoing training that current and future agents would receive?

Absolutely. It's not only updating the training, it's changed our recruiting. As we're out in the colleges and at different conferences, trying to recruit people to come and work for us. We ask about crypto or cyber. Do you have that experience? Can you help us, you know, maybe stand up our own cyber unit, which we did in the New York Field Office within the last year. I have seven or eight agents with a supervisor. And that's all they do are crypto and cyber-related crimes. So that's what they investigate all day long. And that's who we recruit. And if someone comes to us, and we interview them, and they have a great background in cyber or crypto, then we'll put them into that crypto unit.

The IRS overall was a part of this recent debt ceiling deal in Washington. As part of the agreement, $1.4 billion for the IRS that was included in the Inflation Reduction Act that was passed in 2022 was rescinded. Additionally, the debt deal removed $20 billion from the IRS over the next two years to divert those funds. There were plans to spend that money from the inflation Reduction Act to improve operations, invest in new technology, hire more customer service reps and expand the agency's ability to audit the high wealth taxpayers. Now those spending cuts have been nixed, what impact might that have?

Speaking from my position, I would say that we're just doing business as usual. We get our funding stream that's sent to CI. CI is a very small part of the IRS as a whole. We're only about 3% of the entire IRS organization. So we get our funding stream from main IRS. Whatever that funding stream may be we work around that. You know, we're still hiring right now, as a matter of fact, we're hiring agents as we speak and that's to backfill the agents that have retired over the last several years, you know, our attrition has been large over the last several years, and we lost at least 1,000 agents over the last 10 years. So we're just trying to backfill them just to get to the level where we were 10 years ago. So we don't try to concern ourselves with the funding portion. I get a budget. I work within that budget. And I do the best I can with what I have.

You noted those staffing reductions. In the mid 1990s, according to the IRS CI, staffing was more than 5,000. Today, it's just over 3,000. You've been with the agency since 2004. So you've kind of been in the middle of that. What sort of impacts has that had on the amount of investigations, the amount of work the agency is able to do?

It does have an impact. So right now, as you mentioned, we're about 3,000 total in the agency, but that's about 2,000 Special Agents. So those are sworn law enforcement officers. Out of that, you have to take the managers out of that, who don't conduct investigations. So we're about 1,800-1,900 working investigators out in the field. So of course, it's going to have an impact because an investigator can only work so many cases. You can't overload a special agent with cases that are complex. You know, our cases could take 18 months to two years to complete. So you can't have your 20-30 cases in inventory at the same time. You'll never get them all done. So we try to work as best we can. We try to use force multipliers like using other agencies and we're partnering with other agencies, not just federal agencies, state and local agencies also. We have task force officers that we bring on from state and local agencies, police officers that that come and sit with us. We deputize them, and they work financial investigations alongside us. And I've seen that throughout my career, there's been ups and downs. There's always an ebb and flow. And not just in the federal government with any job, you know, there's hiring and there's freezes. There's layoffs. You know, we just again, we just work through it the best we can and do the best job we can. The taxpayers pay our salary, and we want to give them the best return on their investment that we can.

I mentioned the debt ceiling debate. And the IRS was a part of that.  Part of that that funding debate for the IRS included members of the IRS, investigators, becoming the target of I think it's fair to say political attacks. Has there been any reaction within the agency to hearing that out in the public?

The only thing that we really want to let the public know is there is no push to hire 87,000 armed agents. It couldn’t happen. It's impossible. There's only, you know, 80,000 to 100,000 people that work at the IRS to begin with, as I mentioned earlier, there's only a few thousand people that are sworn law enforcement officers that are authorized to carry weapons. Our agency has never swelled beyond, you know, four to five thousand employees in total, if I'm not mistaken. So the push, we don't have the capacity for that many. So the people that are being hired that will be issued a weapon and a badge are those that are what we call 18-11s. Which is the federal code for a law enforcement officer. So an FBI agent is an 18-11, DEA special agents is 18-11, IRS special agent is an 18-11. So we can only hire so many to begin with. And again, they are sworn law enforcement officers who are highly trained, they spent my as I said, they spent 27 weeks learning how to be not just a law enforcement officer, but how to conduct financial investigations. So that's what we're trying to get the message out that, you know, we're just looking to backfill our ranks, to get people on the payroll and an in investigative role that can go out and look for people that are committing egregious financial crimes, whether it be a tax crime, or money laundering crime, or maybe Bank Secrecy Act crime, which we have authority over. But we're the only federal agency that are authorized to investigate tax crimes. There's no other agency out there that can do it. So if we shrink, then the amount of people that are may want to take a chance and willfully cheat on their taxes increases, because there's no enforcement.

I think it's fair to say that IRS Criminal Investigation, one of the lesser known of the federal law enforcement agencies. In your mind, is that good or bad? Or both?

You know, we've flown under the radar, I think for quite some time. And I think we realized that if you look at any financial crime that's out there, you see the same agencies sometimes right, that are maybe mentioned. And our agents are always there. If it has to do with money, you can pretty much guarantee our agents are probably somewhere on that investigation. But I think we realized in the last few years, it's better to maybe publicize, we're not trying to go overboard, but we are trying to get our name out there. So we've hired people like my public affairs officer here, that get us to do interviews like this or to get us in the paper or to get us in the media, just to highlight what we do as an agency, what our agents are out there working on, to maybe dispel some of the things that people know or don't know about us. That okay, they're going after people that are really egregious. And, when you think about it, the people that are cheating on their taxes in a willful way, in a major way that rise to the level of criminality are not stealing from the IRS. They're not stealing from the government. They're stealing from all of us, because somebody has to make up that difference in the tax gap. And the people that make that up are the honest taxpayers who pay their taxes on time every year, and do it the right way. So we're trying to get that message out there that, you know, we you pay us and we're here to protect your money and to protect your finances. You know, things that that get paid for Social Security or, you know, whatever federal program is out there that's paid by the taxes that come in, through the federal taxation system, through the IRS. If people are willfully evading that, that obligation, then it's taking away from those programs.

Jim is WAMC’s Associate News Director and hosts WAMC's flagship news programs: Midday Magazine, Northeast Report and Northeast Report Late Edition. Email: jlevulis@wamc.org
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